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IRS identity theft fraud scheme thwarted by CU tip

PITTSBURGH (4/25/14)--For more than seven years, an identity theft and fraud ring captured up to $10 million in income tax refunds by using false tax returns. It might have gone on longer had an employee at a Pennsylvania credit union not noticed duplicate phone numbers on two different accounts in 2012.

An employee of $252 million-asset Widget Financial FCU, Erie, Pa., found the discrepancies in December 2012, which in turn, led to notifying the FBI and unraveling a global network of fraud.

On Wednesday, the FBI announced it had indicted five people who allegedly used the personal identification of 2,400 people to file for $21 million in false federal tax refunds, receiving about $10 million from the IRS in accounts fraudulently opened in victim's names.

U.S. Attorney General David Hickton said the fraud was "on a scale that's unprecedented here" (
Pittsburgh Post-Gazette
April 24). The five were charged with conspiracy to commit wire fraud and aggravated identity theft.

According to the indictment filed in U.S. District Court for the Western District of Pennsylvania, fraudulent Form 1040s were drafted in the names of individuals whose identity had been stolen. Bank accounts also were fraudulently opened and were the depositories for the fraudulent federal tax refunds. The indictment noted that credit cards were falsely obtained with the stolen information as well.